Europe avoids black friday thanks to Trump, Milan hit by banking sector losses

Indices

Major European indices are exhibiting resilience, consolidating near or just below their record highs despite minor pullbacks. The FTSE MIB Index (FTSEMIB.MI) stands at 41758.11, reflecting a daily decline of -1.45388, but maintaining an overall strong upward trend, fueled by strength in banking and energy sectors. The DAX Performance Index (^GDAXI) is at 23830.99, down -1.81772, yet still trading close to its yearly highs, signaling persistent blue-chip momentum. France’s CAC 40 (^FCHI) registers at 8174.2, with a marginal slip of -0.17573, indicating ongoing sensitivity to domestic political dynamics and sector divergence. The FTSE 100 (^FTSE) is at 9354.57, lower by -0.86392, but continues to gain support from energy and financials. Spain’s IBEX 35 (^IBEX) posts 15601.1, with a modest loss of -0.2857, remaining near its annual peak and maintaining bullish undertones. The Euro STOXX 50 (^STOXX50E) is trading at 5607.39, down by -0.78945, and continues to show a strong long-term bullish trend signal. This consolidation across indices suggests a healthy pause amid sector rotation and ongoing institutional inflows.

Stocks

Sector rotation is a defining feature in European equities at present. Steelmakers such as ArcelorMittal (MT:MT), Aperam (APAM.AS), Thyssenkrupp (TKAG.DE), and SSAB (SSABa.ST) have each advanced over 3, buoyed by European Commission policy changes on steel import quotas. In contrast, automotive stocks like BMW (BMW:GR) have dropped 8.9 after revising their earnings outlook downward amid trade tensions and weaker demand. Technology names such as ASML (ASML.AS) and ASMI (ASMI.AS) faced modest losses, reflecting concerns about U.S. chip export restrictions. French banks, including Société Générale (GLE), Crédit Agricole (ACA), and BNP Paribas (BNP), saw declines that weighed on the CAC 40. Trading strategies should focus on momentum in basic resources, while exercising caution in the auto and technology sectors.

Economic News

Recent economic data have provided both support and headwinds for European equities. Spain’s Industrial Production YoY for August came in at 3.4, surpassing the previous value of 2.7 and expectations, signaling strong industrial momentum that underpins the IBEX 35. Meanwhile, the Bank of Italy has revised its 2026 growth forecast to 0.7, citing the negative impact of U.S. trade tariffs and euro appreciation on exports. Euronext reported record fixed-income trading revenues in Q1 2025, indicating heightened investor participation and volatility. Policy announcements, such as adjustments to steel import quotas, have notably boosted resource stocks, while regulatory and political influences continue to affect banking and French equities.

Economic Events

This week, markets are focused on several key macro events, including the release of Eurozone Industrial Production and GDP data, Germany’s ZEW Economic Sentiment Index, and France’s CPI. Central bank meeting minutes from both the Federal Reserve and European Central Bank are highly anticipated and could shift the outlook for interest rates and rate-sensitive sectors. Spanish government bond auctions are also scheduled, offering insights into sovereign funding costs, though their immediate market impact is expected to be limited.

Market Sentiment

Market sentiment across European equities remains cautiously optimistic. Sustained inflows into blue-chip indices, particularly the Euro STOXX 50, are being driven by expectations of improving credit conditions and supportive central bank policy. Outperformance in sectors such as basic resources and banking is being balanced by notable weakness in autos and technology, underscoring a tactical, sector-specific approach among investors. Political risks in France and regulatory uncertainties in banking pose short-term headwinds, but the overall technical backdrop is constructive, favoring continued upside in pan-European equities.

Please note that the analysis is for informational purposes only and does not constitute financial advice. Users should conduct their own research.